CDI Corp. Reports Second Quarter 2014 Results

PHILADELPHIA, Aug. 6, 2014 /PRNewswire/ -- CDI Corp. (NYSE: CDI) (the "Company") today reported results for the second quarter ended June 30, 2014. 

Second Quarter Highlights

  • Revenue of $284.3 million, an increase of 7.9% versus second quarter 2013  
  • Gross profit margin of 18.6% versus 19.6% for second quarter 2013
  • Operating profit of $7.0 million for second quarter 2014 versus $5.2 million for second quarter 2013
  • Earnings per diluted share of $0.22 versus $0.17 for second quarter 2013

"We are pleased with our second quarter revenue growth, including gains in all of our business segments. Strong demand and market share increases in our OGC and AIE operations allowed us to more than offset continuing revenue challenges in our government-related businesses and with our largest customer," said CDI Interim CEO and President and CFO, Robert Larney. "Operating profit rose 33% during the quarter due to volume increases and prudent expense management. Our continuing focus is to improve operating profit margins throughout our businesses."

For the second quarter of 2014, the Company reported revenue of $284.3 million, an increase of 7.9% versus the prior-year quarter. The Company reported second quarter 2014 operating profit of $7.0 million compared to operating profit of $5.2 million in the prior-year quarter. The Company reported second quarter 2014 net income of $4.4 million, or $0.22 per diluted share, versus net income of $3.4 million, or $0.17 per diluted share, in the prior-year quarter.

Business Segment Discussion

The Company's Global Engineering and Technology Solutions segment (GETS) reported a 5.4% increase in second quarter revenue to $84.3 million when compared to the prior-year quarter. Increased revenue in the Oil, Gas & Chemicals (OGC), Aerospace & Industrial Equipment (AIE), and Hi-Tech verticals was partially offset by declines in the infrastructure and government services businesses, both reported in "Other." Operating profit was $2.2 million versus $2.8 million in the prior-year quarter.

The Company's Professional Staffing Services segment (PSS) reported a 9.5% revenue increase in the second quarter to $184.7 million when compared to the prior-year quarter. Revenue increased 64% in OGC while AIE and "Other" grew at more modest rates in contrast to a decline in Hi-Tech. PSS operating profit was $6.9 million versus $5.2 million the prior-year quarter.

Management Recruiters International, Inc. (MRI) second quarter revenue increased 4.2% to $15.3 million compared to the prior-year second quarter, driven by an increase in contract staffing. Royalty and franchise fee revenue was essentially flat versus the year-ago quarter. MRI's second quarter operating profit was $1.8 million compared to $2.1 million in the prior-year quarter.

Business Outlook

The Company anticipates revenues for the third quarter of 2014 in the range of $286 million to $296 million, compared to $277.9 million in the prior-year third quarter.

Conference Call

At 11:00 a.m. Eastern Time today, Robert Larney, Interim President & CEO and CFO, will host a conference call to discuss the 2014 second quarter results and business outlook. The call can be accessed live, via the Internet, at www.cdicorp.com

About CDI

CDI Corp. (NYSE: CDI) is an integrated, market-leading engineering and technology services firm providing differentiated, client-focused solutions in select global industries. CDI provides global engineering and technology solutions and professional staffing services through its global business operations. The Company also provides staffing services through its franchised Management Recruiters International, Inc. (MRI) operating unit. Learn more at www.cdicorp.com.

Caution Concerning Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements that address expectations or projections about the future, including, but not limited to, statements about our future financial results, are forward-looking statements. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions that are difficult to predict. Because these forward-looking statements are based on assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual outcomes and results may differ materially from what is expressed in these forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to: the inability to successfully execute on our CEO leadership transition, our strategic plan or the realignment announced in December 2013; weakness in general economic conditions and levels of capital spending by clients in the industries we serve; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of our clients' capital projects or the inability of our clients to pay our fees; the termination or non-renewal of a major client contract or project; delays or reductions in government spending, including the impact of sequestration on U.S. government defense spending; credit risks associated with our clients; competitive market pressures; the availability and cost of qualified personnel; our level of success in attracting, training and retaining qualified management personnel and other staff employees; changes in tax laws and other government regulations including the impact of healthcare reform laws and regulations; the possibility of incurring liability for our business activities, including the activities of our temporary employees; our performance on client contracts; negative outcome of pending and future claims and litigation; and government policies, legislation or judicial decisions adverse to our businesses.  More detailed information about these and other risks and uncertainties may be found in our filings with the SEC, particularly in the "Risk Factors" section of our Form 10-K and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our Form 10-Ks and Form 10-Qs. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We assume no obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by law. 

Financial Tables Follow

 

CDI CORP. AND SUBSIDIARIES

(Amounts in thousands, except per share data)

(Unaudited)






Three Months Ended


Six Months Ended


June 30,


June 30,

Consolidated Statements of Income:

2014


2013



2014


2013














Revenue

$

284,282



$

263,363



$

560,554



$

532,829


Cost of services

231,485



211,818



456,994



431,133


Gross profit

52,797



51,545



103,560



101,696


Operating and administrative expenses (1)

46,107



46,303



91,815



91,541


Restructuring and other related costs

(298)





72




Operating profit

6,988



5,242



11,673



10,155


Other income (expense), net

8



(62)



(74)



(113)


Income before income taxes

6,996



5,180



11,599



10,042


Income tax expense (1)

2,544



1,683



5,106



3,992


Net income

4,452



3,497



6,493



6,050


Less: Income attributable to the noncontrolling interest

25



59



29



121


Net income attributable to CDI (1)

$

4,427



$

3,438



$

6,464



$

5,929














Earnings per common share:












Basic

$

0.23



$

0.18



$

0.33



$

0.31


Diluted

$

0.22



$

0.17



$

0.33



$

0.30


Weighted-average shares outstanding - Basic

19,565



19,436



19,536



19,407


Weighted-average shares outstanding - Diluted

19,767



19,743



19,763



19,733






































Selected Balance Sheet Data:









 

June 30,
 2014


 

December 31,
 2013

















Cash and cash equivalents









 

$

 

32,418



$

45,479



Accounts receivable, net










238,702




230,613



Total current assets










290,194




291,227



Total assets










404,625




405,807



Total current liabilities










98,571




103,236



Total CDI shareholders' equity










287,323




284,308



























































Six Months Ended










June 30,

Selected Cash Flow Data:









2014


2013















Net cash provided by (used in) operating activities









$

503



$

(12,007)


Depreciation and amortization









5,483



5,123


Capital expenditures









5,218



3,023


Dividends paid to shareholders









5,075



2,524















































Three Months Ended


Six Months Ended






June 30,


June 30,

Selected Other Financial Data:





2014


2013



2014


2013


















Gross profit margin





18.6

%


19.6

%


18.5

%


19.1

%

Operating and administrative expenses as a percentage of revenue





16.2

%


17.6

%


16.4

%


17.2

%

Operating profit margin





2.5

%


2.0

%


2.1

%


1.9

%

Effective income tax rate





36.4

%


32.5

%


44.0

%


39.8

%

Pre-tax return on net assets (2)





8.9

%


10.7

%




















Three Months Ended


Six Months Ended


June 30,


June 30,

Selected Segment Data:

2014


2013


2014


2013













Global Engineering and Technology Solutions (GETS)












Revenue:












Oil, Gas and Chemicals (OGC)

$

34,725



$

30,136



$

67,268



$

59,786


Aerospace and Industrial Equipment (AIE)

19,807



18,514



39,653



35,383


Hi-Tech

8,108



7,524



16,018



15,145


Other

21,648



23,777



43,603



47,674


Total revenue

$

84,288



$

79,951



$

166,542



$

157,988


Gross profit

$

22,805



$

22,755



$

45,205



$

44,279


Gross profit margin

27.1

%


28.5

%


27.1

%


28.0

%

Operating profit

$

2,215



$

2,842



$

3,771



$

4,722


Operating profit margin

2.6

%


3.6

%


2.3

%


3.0

%













Professional Staffing Services (PSS)












Revenue:












Oil, Gas and Chemicals (OGC)

$

44,417



$

27,021



$

89,480



$

60,363


Aerospace and Industrial Equipment (AIE)

20,583



19,363



40,500



38,280


Hi-Tech

59,895



71,457



120,029



143,451


Other

59,835



50,918



114,860



103,773


Total revenue

$

184,730



$

168,759



$

364,869



$

345,867


Gross profit

$

22,809



$

21,873



$

44,755



$

44,143


Gross profit margin

12.3

%


13.0

%


12.3

%


12.8

%

Operating profit

$

6,867



$

5,169



$

13,012



$

11,334


Operating profit margin

3.7

%


3.1

%


3.6

%


3.3

%













Management Recruiters International (MRI)












Revenue:












Contract Staffing

$

11,808



$

11,208



$

22,880



$

22,444


Royalties and Franchise Fees

3,456



3,445



6,263



6,530


Total revenue

$

15,264



$

14,653



$

29,143



$

28,974


Gross profit

$

7,183



$

6,917



$

13,600



$

13,274


Gross profit margin

47.1

%


47.2

%


46.7

%


45.8

%

Operating profit

$

1,752



$

2,060



$

3,012



$

3,689


Operating profit margin

11.5

%


14.1

%


10.3

%


12.7

%






































(1)  In the first quarter of 2014, the Company recorded an aggregate $0.9 million charge to net income related to the separation of the Company's former CEO that was comprised of a $0.7 million pre-tax charge ($0.4 million after tax) to operations and an additional $0.5 million charge to income tax expense for the write-off of certain deferred tax assets related to the forfeiture of outstanding equity awards.













(2)  Pre-tax return on net assets is calculated as earnings before income taxes for the prior 12 consecutive months divided by the average of the corresponding beginning and ending period net assets. Net assets include total assets minus total liabilities excluding cash and cash equivalents, income tax accounts and debt.

 

SOURCE CDI Corp.



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